Limitation for Section 7 insolvency applications runs from default, while pending winding up does not bar IBC proceedings.

A Section 7 insolvency application must be filed within limitation computed from the date of default, and only a valid acknowledgement within time can extend limitation under the Limitation Act. Communications relied upon here were either time-barred or insufficient, so the application was barred by limitation and the admission order was set aside. Pendency of winding up proceedings and appointment of an official liquidator did not bar initiation of proceedings under the Insolvency and Bankruptcy Code, because a Section 7 proceeding is independent and the Code overrides inconsistent laws under Section 238.

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Issues: (i) whether the Section 7 insolvency application was barred by limitation in view of the date of default and the alleged acknowledgements; (ii) whether pendency of winding up proceedings and appointment of an official liquidator barred initiation of proceedings under the Insolvency and Bankruptcy Code.

Issue (i): whether the Section 7 insolvency application was barred by limitation in view of the date of default and the alleged acknowledgements.

Analysis: The date of default was taken as the date of classification of the account as NPA. The application under Section 7 was filed more than three years thereafter. The communications relied upon as acknowledgements were either beyond the limitation period or not sufficient to extend limitation within the meaning of Section 18 of the Limitation Act, 1963. The Code is not intended to revive stale or time-barred claims, and limitation for a Section 7 application runs from the date of default unless a valid acknowledgement within time extends it.

Conclusion: The application was barred by limitation and this issue was decided in favour of the appellant.

Issue (ii): whether pendency of winding up proceedings and appointment of an official liquidator barred initiation of proceedings under the Insolvency and Bankruptcy Code.

Analysis: A Section 7 proceeding is an independent proceeding. By virtue of Section 238 of the Insolvency and Bankruptcy Code, 2016, the Code overrides inconsistent laws. Accordingly, pendency of winding up proceedings before the High Court does not, by itself, prevent initiation of a proceeding under Section 7 of the Code.

Conclusion: Pendency of winding up proceedings did not bar maintainability of the Section 7 application.

Final Conclusion: The impugned admission order was set aside because the insolvency application was time-barred, while the pendency of winding up proceedings was held not to be a legal impediment to proceedings under the Code.

Ratio Decidendi: A Section 7 application under the Insolvency and Bankruptcy Code must be filed within the limitation period computed from the date of default, and only a valid acknowledgement within that period can extend limitation; pendency of winding up proceedings does not bar such a proceeding because the Code has overriding effect and treats the Section 7 process as independent.

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